Designing Effective Multilateral Investment Dispute Settlement Mechanism: Governance Lessons from the WTO Dispute Settlement Mechanism

Abstract

This article examines how a multilateral investment dispute settlement mechanism can be designed by taking governance lessons from the WTO dispute settlement mechanism. It analyses the institutional strengths and weaknesses of the WTO system. It focuses on multilateralism, adjudicative structure, decision making, appointment of adjudicators and supporting institutions. The article argues that the success of the WTO largely stems from its standing bodies, binding rules and institutional coherence. Simultaneously, it points out the limits of consensus based decision-making and ad hoc adjudication. Based on these examination and arguments, the article evaluates ongoing reform efforts under UNCITRAL Working Group III. It recommends a two-tier standing mechanism with qualified judges, a plenary body with majority based voting, a clear code of conduct, and an independent secretariat. It also stresses cost control and the establishment of an advisory centre. The article concludes that selective and careful adaptation, rather than wholesale replication of the WTO model is essential for an effective and legitimate multilateral investment dispute settlement system.